Weather-crushed January saw seasonally-adjusted Case-Shiller home prices - and as a reminder Case-Shiller expressly warns not to use seasonal data but opts for raw, unadjusted reporting - rise 0.87% MoM (better than expected), slower than the revised 0.91% gain in December. However, away from the 'make-everything-feel-better' adjustments, home prices slipped in January following December's brief interlude, leaving the index down 4 of the last 5 months. Of course, it goes witghout sayiung that weather was blamed, as they suggest, "unusually cold and wet weather may have weakened activity in some cities." What is more worrisome however, and farcical, is Case-Shiller's ominous warning against rate hikes, "home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback."
Forget Pyrrhic victories, the more Greek tongues that wag, the clearer it becomes that no one appears to have a clue what is going on. The contradictory tone from various Syriza members has allowed the opposition to sit quietly by (with the odd jab from Samaras) and watch the collapse unfold. The more threats and promises Tsipras makes, the more cornered he becomes as cash outflows accelerate and cash demands loom. It appears all over bar the printing as both sides are now just posturing for who bears the blame for the ultimat exit, as one wit noted, "once you remove walking away from a deal as an option, you are no longer negotiating."
What Titanic? The RMS Titanic, or any of the following:
"When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings. I was concerned about those seniors as well."
- Ben Bernanke first blog post
Put simply, corporate profits are at a record high relative to the economy… and they just began to roll over.
"How many rich people do you know today that are poorer than they were at the peak in 06/07 (apart from Dick Fuld), I don't think I know any.. QE has been distributive to the rich... but now that the world has started this policy it is unable to end it... the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn... where are the liquidity worries at the moment? Equities would be the toughest to exit.. it's like a 5-lane highway going in and goat trail coming out... Brazil is great example"
At the end of the day there is a considerable irony. The Fed has now become the tool of liberal Keynesian do-gooders - exemplified by the school marm who heads it. But its policies are exclusively benefiting Wall Street and the top 1%. They are redistributing income and wealth to the top, not the bottom of society as liberals have always claimed. Needless to say, main street does not need that kind of “help”. And it would do far better on its own hind legs if the monetary politburo joined its Soviet colleagues in the afterlife of mistaken ideologies.
This situation will result in a Crash far larger than 2008. The markets involved are larger as is the risk and the leverage.
Since the depths of the last recession, the price of ground beef in the United States has doubled. Has your paycheck doubled since then? Even though the Federal Reserve insists that we are in a “low inflation” environment, the government’s own numbers show that the price of ground beef has been on an unprecedented run over the past six years...
"...The negative divergence of the markets from economic strength and momentum are simply warning signs and do not currently suggest becoming grossly underweight equity exposure. However, warning signs exist for a reason, and much like Wyle E. Coyote chasing the Roadrunner, not paying attention to the signs has tended to have rather severe consequences."
"The contribution of housing to US GDP continues to run at some of the lowest levels since the end of World War II. New construction of single- and multi-family homes, renovations, broker fees and the like still only make up a bit more than 3% of current GDP, well below the post-war average of 4.7%. Not only has the level of lift from housing come in low, but it has bounced out of the last official recession slowly, too," Deutsche Bank says.
"This market is dumber than a mule, and the nation’s central bank and its counterparts around the world have made it so."
When the phantom wealth evaporates and risk assets go bidless, cash will once again be king, for the simple reason there will be so little of it.
It's a day of ‘master of the universe,’ central bank speeches as both Bank of England governor Mark Carney and Fed chief Janet Yellen preach their ultra loose policies and certain market participants lap up the Gospel according to Mark … and Janet ...
Much of the commentary from the more liberal leaning media has continued to tout that the rise in asset markets over the last few years are clear evidence of economic prosperity in this country. However, is that really the case? In order for rising asset prices to be reflective of overall economic prosperity, the "wealth" generated by those rising asset prices should impact a broad swath of the American populous. Let's take a look to see if that is the case.